Nscale Microsoft Loughton deal collapses over grid power delays

The Nscale Microsoft Loughton deal is over. Microsoft has terminated its agreement to anchor Nscale's flagship AI data center in Loughton, Essex, after grid officials signaled the site would not get power before the 2030s, Reuters reported on Monday, Oct. 19. The Telegraph first reported the decision.

What happened

"This decision relates to a single site," a Microsoft spokesperson said, adding that the company remains committed to its partnership with Nscale. Nscale said its relationship with Microsoft "remains strong and long-term," and that the "London-wide grid issue" had no impact on its other contracts. Microsoft remains involved in an Nscale project in Norway, the Guardian reported.

The Loughton site was meant to start operating early next year with 23,040 Nvidia GB300 chips providing 50 megawatts of computing capacity for Microsoft's Azure services in Britain. Earlier this month, UK Power Networks told Nscale it could not deliver enough power until the early to mid-2030s.

Nscale says it is still committed to the project and is exploring alternative power sources, including generating electricity on site, and is looking at other places to expand in Britain. Microsoft was its only publicly announced customer for the Essex facility. The site was still an operating scaffolding yard in March, the Guardian reported, and has since been cleared.

Why it matters

The timing is awkward for Nscale's listing plans. The company filed for a U.S. initial public offering last month and has been targeting a valuation of about $35 billion, according to the Guardian. It already faces pushback over that valuation, Bloomberg News reported. Losing an anchor tenant at its showcase site gives skeptics more ammunition.

Nscale has grown quickly, with contracted value rising from $100 million to over $103 billion within roughly 30 months, and its prospectus lists Microsoft and Anthropic as expected major customers. But neoclouds are under scrutiny for heavy borrowing, a theme in our coverage of the AI capital cycle and of Larry Fink's data center warning.

The episode also exposes a national bottleneck. The project was among technology deals announced during President Donald Trump's visit to Britain in September 2025, and the government had called it the largest UK sovereign AI data center. Grid connection queues have delayed some data center projects by as long as 13 years. The Nscale Microsoft Loughton deal shows that chips and customers are not enough without power.

What's next

Investors will look for updated customer disclosures in Nscale's IPO filings and any sign that the valuation target moves. The company's board includes former UK deputy prime minister Nick Clegg, who holds a 0.25% stake, and former Meta chief operating officer Sheryl Sandberg. Clegg's stake could be worth $88 million if the company floats at a $35 billion valuation, the Guardian calculated. Ofgem, the energy regulator, has meanwhile said data center projects face fees for grid access to ease the connection queue.

Company updates appear on Nscale's corporate site. Whether it can replace Microsoft at Loughton, or find power faster, will show whether the Nscale Microsoft Loughton deal was a one-site setback or an early warning for the British AI build-out.